A Critical Look at the Conditions Attached to the Restructuring Plans for Ailing Banks Under the European Commission’s Restructuring Communication

Abstract

EU Member States that during the global financial crisis granted financial support to banks have notified or are to due to soon notify restructuring plans for rescued banks. The guidelines on restructuring aid to banks released by the European Commission set out the criteria for the drafting of the restructuring plans. Through these plans the Commission tries to reconcile the objectives of restoring financial stability and maintaining a healthy competition. Importantly, the conditions attached to the restructuring plans may affect to a significant extent the activities and organization of the rescued banks. This article provides for a detailed account of which restructuring measures the Commission has so far imposed. It also outlines the effects that the implementation of these measures are likely to have on the market position of each bank concerned and on the competitiveness of the European banking industry as a whole.